UAE three months away from taxation system

DUBAI: Implementation of tax in the UAE is getting momentum and it is expected that the first phase will be starting from July 2017.  The UAE is around just three months away from coming under taxation system.

It has been stated that the tax implantation is in final stages. On one hand, the Federal National Council (FNC) three days back approved a draft legislation, the Tax Procedure Bill that serves as a framework for issuing tax-related laws and the UAE President Shaikh Khalifa Bin Zayed Al Nahyan’s final approval is required to implement the bill. While, on the other hand, the UAE’s Ministry of Finance announced to start the awareness campaign to educate various stakeholders on the collection of value-added tax (VAT).

Last year, Shaikh Khalifa had issued a decree setting up the Federal Tax Authority (FTA) which is responsible for setting up and maintaining records on taxpayers and taxes paid.  The authority will also issue guidelines and clarifications to taxpayers on matters related to federal taxes and related fines.

Currently, the finance ministry announced the launch of the first phase of awareness sessions, lectures and workshops in respect of value-added-tax and excise tax implementation. The first of the series of awareness workshop will start in Abu Dhabi on April 10th.

In Dubai, the business owners will be briefed in different sessions that will start on April 12th.  There will be different sessions and workshops for small businesses owners and separate briefings for top companies.

The government has advised the business owners to register online at the government website in order to attend the briefings on taxation. The UAE would implement two taxes over the next few years including a Gulf Cooperation Council -wide VAT tax, which will start in 2018 while a selective sales tax would be imposed in the second quarter of 2017.

During the FNC session, State Minister for Financial Affairs Obaid Humaid Al Tayer said the Gulf Cooperation Council (GCC) members and particularly the countries that have common borders should coordinate with each other concerning implementation of VAT tax.

It is expected that the sales tax would cover more than 90 commodities starting the second quarter of this year and expand to cover all member countries by the beginning of 2018. The list of items that will come under new taxation system would be utility bills (water, electricity, internet), tobacco, soft and energy drinks, watches, electronics, entertainment, smartphones, jewelry and luxury cars.

The UAE expects revenue through only tobacco products alone to be Dh2 billion annually. It is stated that the government is not planning to impose corporate tax as the focus of the government is currently only on VAT tax.